Caterpillar (CAT) saw a significant drop in shares during Thursday's intraday trading, with poor sales countering a robust profit that surpassed analyst predictions. The manufacturing company, known for its construction vehicles and engines, announced total revenue of $15.8 billion, falling short of the $16.16 billion estimate from Visible Alpha. Profit, on the other hand, hit $2.86 billion or $5.75 per share, toppling estimates of $2.53 billion or $5.02 per share.
Caterpillar noted a $139 million decrease across its equipment divisions when compared to the first quarter of 2023, predominantly due to a decline in international sales. Specifically, sales of construction equipment plummeted by 25% year-over-year in Europe, Africa, and the Middle East (EAME), and by 14% in the Asia/Pacific region.
Meanwhile, the energy and transportation division experienced a 7% revenue increase from the previous year due to higher demand. Despite projecting an expected drop in sales for the upcoming quarter, Caterpillar maintains that adjusted operating margins will remain steady, aided by increased prices. The company also indicated that sales for the full fiscal year would likely reflect the 2023 levels without any substantial alterations in machine dealer inventory. However, the disappointing sales outlook led to a 7.4% decrease in shares, down to $336.53 as of approximately 10:45 a.m. ET on Thursday.